Top 10 Principles for Managing the Changing Organization - Aug 26, 2009

Posted by: David Alan Buslee in Articles

Business owners used to have a simple goal for themselves and their organizations: stability. They wanted little more than predictable earnings growth.  Market transparency, labor mobility, and instantaneous communications have blown that scenario to smithereens.   Successful companies develop the ability to constantly change to their environment.

In major transformations – like we are experiencing in today’s economy, owners and their advisors conventionally focus their attention on devising the best strategic and tactical plans.  But to succeed, they also must align the company’s culture, values, people, behaviors, and metrics to encourage the desired results. Plans alone do not increase a company’s value; value is realized only through the sustained, collective actions of employees who are responsible for executing and living with the changed environment.

Significant  transformation has four characteristics: scale (the change affects all or most of the organization), magnitude (it involves significant alterations of the status quo), duration (it lasts for months, if not years), and strategic importance. However companies will only reap the rewards when change occurs at the level of the individual employee.

Owners often say they are concerned about how the work force will react, how they can get their team to work together, and how they will be able to lead their people. They also worry about retaining their company’s unique values and sense of identity and about creating a culture of commitment and performance. Leadership teams that fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone awry.

No single methodology fits every company, but there is a set of practices, tools, and techniques that can be adapted to a variety of situations. What follows is a “Top 10” list of guiding principles for change management. Using these as a systematic, comprehensive framework, executives can understand what to expect, how to manage their own personal change, and how to engage the entire organization in the process.

1. Address the “human side” systematically. Any significant transformation creates “people issues”.  An approach for managing change — beginning with the leadership team and then engaging key stakeholders and leaders — should be developed early, and adapted often as change moves through the organization. It should be based on a realistic assessment of the organization’s history, readiness, and capacity to change.

2. Start at the top. When change is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction. They must speak with one voice and model the desired behaviors.

3. Involve every layer. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change “cascades” through the organization. At each layer of the organization, the leaders who are identified and trained must be aligned to the company’s vision, equipped to execute their specific mission, and motivated to make change happen.

4. Make the formal case. Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen.  The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.  

Three steps should be followed in developing the case:

1.)    Confront reality and articulate a convincing need for change.

2.)    Demonstrate faith that the company has a viable future and the leadership to get there.

3.)    Provide a road map to guide behavior and decision making. Leaders must customize this message for various internal audiences.

5. Create ownership. This requires more than mere buy-in or passive agreement; it demands ownership by leaders willing to accept responsibility for making change happen in the areas they influence. It is best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial compensation) or psychological (for example, camaraderie and a sense of shared destiny).

6. Communicate the message. Successful change programs reinforce core messages through regular, timely communication that is both inspirational and practicable and are targeted to provide the right information at the right time and to solicit input and feedback. Often this will require overcommunication through multiple, redundant channels.

7. Assess the cultural landscape. Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization.  Identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They then serve as the common baseline for designing the new corporate vision, and building the infrastructure needed to drive change.

8. Address culture explicitly. Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture, combining cultures, or reinforcing cultures. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors.

9. Prepare for the unexpected.  Effectively managing change requires continual reassessment of its impact and the organization’s willingness and ability to adopt the next wave of transformation. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the adjustments

10. Speak to the individual. Individuals need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will mean for them and those around them. People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution’s commitment.

The B2BCFO helps the owner to focus on these key elements, working as a partner with the owner to anticipate needed change, adapt the organization to the landscape and maintain the key elements that create the individuality of the organization.  Working as long term advisors, B2BCFO’s help the owner focus on their company’s culture and growth while providing timely financial and strategic insight.  This article was adapted from an article in Strategic Business  By John Jones, DeAnne Aguirre and Matthew Calderone of Booz Allen.

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